Studying the Impact of eBay on Injunctive Relief in Patent Cases

Abstract

The Supreme Court’s 2006 decision on eBay Inc. vs MercExchange LLC (the eBay ruling) marked a turning point in the history of patent enforcement and policy. Almost a decade after the eBay ruling, there is still confusion about the implications and impact of this decision. Such questions still remain: Has the rate of injunctions been impacted, and if so, by how much? And, which types of parties are impacted - practicing or non-practicing entities? To our knowledge, there is not a systematic empirical study that explores whether the eBay ruling impacted practicing and non-practicing patent holders differentially, by examining an exhaustive set of rulings on both preliminary and permanent injunctions and comparing the rates pre-eBay and post-eBay. Employing a comprehensive dataset of patent cases from 2000-2012, we seek to address the following issues: (1) The difference in the rate at which both preliminary and permanent injunctions were granted for cases where an injunction was requested, including the rate at which these motions were filed pre- and post- eBay; (2) Whether the rate of injunctions granted was different based on patent ownership (practicing versus non-practicing entities). In addition, any outcome of patent cases must take into account the quality of the patents asserted. Therefore, while studying whether injunctions were granted or not, we control for proxies for patent quality based on the received citations and other metrics. We find that the U.S. Supreme Court decision in eBay v. MercExchange has had a significant impact on injunctive relief in patent cases. Contrary to earlier empirical studies involving small sample datasets, our extensive analysis with a dataset involving thousands of patent cases both pre- and post- eBay shows that the eBay decision has reduced, rather dramatically, both the level at which injunctive relief is sought in patent cases and the rate at which they are granted, particularly for preliminary injunctions. We also study the impact of the eBay decision on the quality of patents for which injunctive relief is ought and the nature of the patent plaintiff (operating company vs. non-operating company) and their relative success rates with obtaining injunctive relief. This study raises important policy questions about the current diminished role for injunctive relief in patent cases and also the relationship between injunctions and the type of patent-plaintiff entity and patent quality.